Pepsu Road Transport Corporation v. CIT

ACIT, Circle-2(1)(1), Mumbai vs. M/S Bank of India, Mumbai

Bench: Shri Vikram Singh Yadavshri Sandeep Singh Karhail

…he Ld. CIT(A) has erred in deleting the disallowance of interest on Perpetual Bonds as Perpetual Bonds are not borrowed funds as per settled legal position in the decision of Hon'ble Punjab & Haryana High Court in the case of Pepsu Road Transport Corp vS CIT (130 ITR 18 (P&H)? (Tax Effect : Rs.227,39,58,906/- @34.61% of Rs.657,06, 16,348/-) 5. Whether on the facts and circumstances of the case and in law, the Id. CIT (A) erred in deleting the addition made on account of interest on NΡΑ amounting to Rs. 733,98,20, 787/-not recognized by the assessee in its books of accounts on the ground that the same is not in li…

ACIT, Circle-2(1)(1), Mumbai vs. M/S Bank of India, Mumbai

In the result, the appeal by the Revenue for the assessment year 2018-

Bench: Shri Vikram Singh Yadavshri Sandeep Singh Karhailita No.1452/Mum/2023 Assessment Year : 2016-17 Assessment Year : 2018-19

…onds as Perpetual Bonds cannot be are not borrowed funds as per settled ITA No.1451, 1452, 1547 & 1548/Mum/2023 (A.Ys. 2016-17 & 2018-19) 30 legal position in the decision of Hon'ble Punjab & Haryana High Court in the case of Pepsu Road Transport Corps CIT (130 ITR 18 (P&H)? (Tax Effect: Rs. 55.63.92.816/- @ 34.61% of Rs. 160,77,00,000/-) 9. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was correct in deleting the addition of Rs.443,40,00,000/- on account of commission received on deferred payment bank guarantee when in fact the commission income has accrued and arisen and…

Bank of India, Mumbai vs. The National Faceless Assessment Centre, Mumbai

Bench: Shri Vikram Singh Yadavshri Sandeep Singh Karhail

…he Ld. CIT(A) has erred in deleting the disallowance of interest on Perpetual Bonds as Perpetual Bonds are not borrowed funds as per settled legal position in the decision of Hon'ble Punjab & Haryana High Court in the case of Pepsu Road Transport Corp vS CIT (130 ITR 18 (P&H)? (Tax Effect : Rs.227,39,58,906/- @34.61% of Rs.657,06, 16,348/-) 5. Whether on the facts and circumstances of the case and in law, the Id. CIT (A) erred in deleting the addition made on account of interest on NΡΑ amounting to Rs. 733,98,20, 787/-not recognized by the assessee in its books of accounts on the ground that the same is not in li…

Bank of India, Mumbai vs. ACIT-2(1)(2), Mumbai

In the result, the appeal by the Revenue for the assessment year 2018-

Bench: Shri Vikram Singh Yadavshri Sandeep Singh Karhailita No.1452/Mum/2023 Assessment Year : 2016-17 Assessment Year : 2018-19

…onds as Perpetual Bonds cannot be are not borrowed funds as per settled ITA No.1451, 1452, 1547 & 1548/Mum/2023 (A.Ys. 2016-17 & 2018-19) 30 legal position in the decision of Hon'ble Punjab & Haryana High Court in the case of Pepsu Road Transport Corps CIT (130 ITR 18 (P&H)? (Tax Effect: Rs. 55.63.92.816/- @ 34.61% of Rs. 160,77,00,000/-) 9. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was correct in deleting the addition of Rs.443,40,00,000/- on account of commission received on deferred payment bank guarantee when in fact the commission income has accrued and arisen and…

DCIT-2(3)(1), Mumbai vs. Indusind Bank Ltd., Mumbai

In the result, the Income Tax Appeal is

Bench: Ms Padmavathy S, Am & Shri Raj Kumar Chauhan, Jm

…10.2016 USD 1,16,68,81,013 34,00,00,000 2,47,65,45,011 It is further noticed that the assessee had demonstrated from the submission that these debt instruments were also redeemed. We also find that facts of the case of Pepsu Road Transport Corporation Vs. CIT 130 ITR 18 (P & H) relied upon by the ld. D.R. are distinguishable from the case of the assessee. In that case the capital was not borrowed but the same was provided by the Government as per the provisions of the Road Transport Corporation Act, 1950 whereas in the case of the assessee bank it had borrowed the money from the lenders. Similarly the fact of the…

Indusind Bank Ltd, Mumbai vs. The DCIT-2(3)(1), Mumbai

In the result, the Income Tax Appeal is

Bench: Ms Padmavathy S, Am & Shri Raj Kumar Chauhan, Jm

…0.2016 USD 34,00,00,000 1,16,68,81,013 2,47,65,45,011 It is further noticed that the assessee had demonstrated from the submission that these debt instruments were also redeemed. We also find that facts of the case of Pepsu Road Transport Corporation Vs. CIT 130 ITR 18 (P & H) relied upon by the ld. D.R. are distinguishable from the case of the assessee. In that case the capital was not borrowed but the same was provided by the Government as per the provisions of the Road Transport Corporation Act, 1950 whereas in the case of the assessee bank it had borrowed the money from the lenders. Similarly the fact of the…

ACIT Cir 2(1)(1), Mumbai vs. Bank of Baroda, Mumbai

In the result, the appeal by the Revenue is dismissed

Bench: Shri Amarjit Singhshri Sandeep Singh Karhailbank Of Baroda, C-26, G-Block, Baroda Corporate Centre, Bandra Kurla Complex, Bandra (East), Mumbai-400051. ……………. Appellant Pan: Aaacb 1534 F V/S Acit, 2(1)(1), ……………. Respondent Mumbai-400051. Acit, Circle - 2(1)(1), Room No. 561, 5Th Floor, Aayakar Bhavan, M.K. Road, ……………. Appellant Mumbai-400020. V/S Bank Of Baroda, C-26, G-Block, Baroda Corporate Centre, Bandra ……………. Respondent Kurla Complex, Bandra (East), Mumbai-400051. Pan: Aaacb 1534 F

…he IT Act, 1961. 3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding that the Perpetual Bonds cannot be compared to the equity/ share capital of the banks without considering as per settled legal position in 130 ITR 18 ( P & H) of Hon'ble Punjab & Haryana High Court in the case of Pepsu Road Transport Corp vs CIT that an element of refund or repayment is a must in the concept of borrowing." 31. The issue arising in ground no.1, raised in Revenue’s appeal, pertains to the disallowance of the broken period of interest. 32. The brief facts of the case pertaining…

Bank of Baroda, Mumbai vs. ACIT 2 (1)(1), Mumbai

In the result, the appeal by the Revenue is dismissed

Bench: Shri Amarjit Singhshri Sandeep Singh Karhail

…he IT Act, 1961. 3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding that the Perpetual Bonds cannot be compared to the equity/ share capital of the banks without considering as per settled legal position in 130 ITR 18 ( P & H) of Hon'ble Punjab & Haryana High Court in the case of Pepsu Road Transport Corp vs CIT that an element of refund or repayment is a must in the concept of borrowing." 31. The issue arising in ground no.1, raised in Revenue's appeal, pertains to the disallowance of the broken period of interest. 32. The brief facts of the case pertaining to…

Assistant Commissioner, Mumbai vs. Idbi Bank Limited, Mumbai

In the result, the appeal of the revenue bearing ITA No

Bench: Shri. Anikesh Banerjee & Smt. Renu Jauhri

…incurred in respect of Innovative Perpetual Debt Instruments as discussed elaborately in the assessment order. The Assessing Officer relied on the decision of the Hon'ble Punjab & Haryana High Court in the case of Pepsu Road transport Corpn v CIT, reported in 130 ITR 18 (P&H) and held that in case of perpetual bonds, where the lender does not have authority to claim refund of the amount given, the said amount cannot be held as 'borrowing' and, hence, the interest on such bonds is not admissible as deduction u/s 36(1)(iii).. The Ld. CIT(A) held that Perpetual bonds cannot be compared to the equity/share capital of…

Tmf Holdings Ltd, Mumbai vs. ACIT Circle 1(3)(2), Mumbai

In the result, the grounds raised by the assessee are allowed

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GAGAN GOYAL (Accountant Member)

…ity is not allowable. The assessee however may argue that it is interest on "borrowing" if not considered deposit. In this regard, it may be mentioned that it was held by the Hon'ble Punjab & Haryuna High Court in the case of Pepsu Rood Transport Corpn. V CIT 130 ITR 18 (P&H), that an element of refund or repayment is a must in the concept of borrowing. If there is no obligation of refund the capital provided, interest on such capital is not deductible under Section 36(1)(III). Hence, in the case of Hybrid or perpetual debentures, where the leader does not have authority or right to claim refund on the amount gi…

State Bank of India, Mumbai vs. Principle Commissioner of Income Tax-2, Mumbai

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

…. 11.4 The learned PCIT erred in not considering the alternate claim of the Bank that interest on IPDI is allowable under section 37(1). 11.5 The learned PCIT erred in relying on the decision held in the case of Pepsu Road Transport Corpn v CIT, reported in 130 ITR 18 (P&H). 11.6 The learned PCIT erred in not appreciating that the said issue is decided by the ITAT in Bank's own case (i.e., State Bank of Bikaner & Jaipur in ITA No. 2873/Mum/2019). Accordingly, the issue is well settled in favour of the Bank and hence outside the purview of section 263. 12. Disallowance of depreciation on leased assets of INR 1…

DCIT-3(4), Mumbai vs. M/S Idbi Bank Ltd, Mumbai

In the result, appeal filed by the assessee is partly allowed

Bench: Shri Kuldip Singh, Hon'Ble & Shri S. Rifaur Rahman, Hon'Bledcit- 3(4) V. M/S. Idbi Bank Ltd 29Th Floor, Center-1 Central Processing Unit (Tds) World Trade Center, Cuffe Parade Plot No. 82/83, Elemach Bldg Mumbai- 400005 Road No. 7, Street No. 15 Midc, Andheri (E) Mumbai- 400093 Pan: Aabci8842G (Appellant) (Respondent) M/S. Idbi Bank Ltd V. Acit/Dcit-Ltu 22Nd Floor, Idbi Tower 29Th Floor, Centre No. 1 Wtc Complex, Cuffe Parade World Trade Centre, Cuffe Parade Mumbai- 400005 Mumbai- 400005 Pan: Aabci8842G (Appellant) (Respondent)

…incurred in respect of Innovative Perpetual Debt Instruments as discussed elaborately in the assessment order. The Assessing Officer relied on the decision of the Hon'ble Punjab & Haryana High Court in the case of Pepsu Road transport Corpn v CIT, reported in 130 ITR 18 (P&H) and held that in case of perpetual bonds, where the lender does not have authority to claim refund of the amount given, the said amount cannot be held as 'borrowing' and, hence, the interest on such bonds is not admissible as deduction u/s 36(1)(iii).. The Ld. CIT(A) held that Perpetual bonds cannot be compared to the equity/share capital of…

Asuda Holdings Private Limited, Mumbai vs. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Mumbai

In the result, appeal filed by the assessee is partly allowed

Bench: Shri Kuldip Singh, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble

…ent of refund is a must. An element of refund or repayment is a must in the concept of borrowing. If there is no obligation to refund the capital provided, interest on such capital is not deductible under Section 36(1)(ii) - Pepsu road Transprot Corpn. V. CIT 130 ITR 18 (P&H). (iii) The phrase "for the purpose of business" - The expression "for the purpose of business" occurs in Section 36(1)(iii) and also in Section 37(1). A similar expression with different wording also occurs in Section 57(iii) which reads as "for the purpose of making or earning income". This issue came up for consideration before the Supreme…

Tata Steel Limited, Mumbai vs. The Principle Commissioner of Income Tax, Mumbai

In the result, both the appeals of the assessee are allowed

…is not available to holders of the bonds and therefore, interest payable paid on these bonds are not allowable under section 36(1)(iii) of the Act Reliance is placed on the decision of Hon'ble Haryana High Court in the case of Pepsu Road Transport Corpn v CIT 130 ITR 18(P&H) wherein it has been held that an element of refund or repayment is a must in the concept of borrowing. If there is no obligation to refund the capital provided interest on such capital is not deductible 4. The Hon'ble DRP has sustained an identical disallowance in the case of the assessee for A.Y. 2013-14. (ii) In view of the aforesaid facts…

Tata Steel Limited, Mumbai vs. The Principle Commissioner of Income Tax, Mumbai-2, Mumbai

In the result, both the appeals of the assessee are allowed

…is not available to holders of the bonds and therefore, interest payable paid on these bonds are not allowable under section 36(1)(iii) of the Act Reliance is placed on the decision of Hon'ble Haryana High Court in the case of Pepsu Road Transport Corpn v CIT 130 ITR 18(P&H) wherein it has been held that an element of refund or repayment is a must in the concept of borrowing. If there is no obligation to refund the capital provided interest on such capital is not deductible 4. The Hon'ble DRP has sustained an identical disallowance in the case of the assessee for A.Y. 2013-14. (ii) In view of the aforesaid facts…

Icici Bank Limited, Mumbai vs. The Dy. Commissioner of Income Tax, 2(3)(1), Mumbai

In the result, the appeal of the assessee is allowed and the appeal of the revenue is dismissed

Bench: Ld Cit(A). Hence Both The Parties Have Filed These Appeals.

….2016 USD 34,00,00,000 1,16,68,81,013 2,47,65,45,011 It is further noticed that the assessee had demonstrated from the submission that these debt instruments were also redeemed. We also find that facts of the case of Pepsu Road Transport Corporation Vs. CIT 130 ITR 18 (P & H) relied upon by the ld. D.R. are distinguishable from the case of the assessee. In that case the capital was not borrowed but the same was provided by the Government as per the provisions of the Road Transport Corporation Act, 1950 whereas in the case of the assessee bank it had borrowed the money from the lenders. Similarly the fact of the…

DCIT-2(2)(1), Mumbai vs. M/S State Bank of India (Successor to State Bank of Bikaner and Jaipur), Mumbai

In the result, the appeal of the Revenue is dismissed, whereas the appeal of the assessee is allowed partly for statistical purposes

Bench: Shri Om Prakash Kant (Account Member) & Ms. Kavitha Rajagopal () I.T.A. No. 3033/Mum/2019 (A.Y. 2015-16) I.T.A. No. 2873/Mum/2019 (A.Y. 2015-16) Dcit-2(2)(1), Vs. M/S State Bank Of India Mumbai (Successor To State Room No. 545, Bank Of Bikaner & 5Th Floor, Ayakar Jaipur) Bhavan Financial Reporting & Mumbai-400020 Taxation, 3Rd Floor, Corporate Centre, Madam Cama Road Nariman Point, Mumbai- 400021 (Appellant) (Respondent)

…petual nature, high loss absorption capacity and discretionary payout with existence of full coupon discretion. The Ld. A.O. relied on the decision of Hon’ble Punjab and Haryana High Court in the case of Pepsu Road transport Corporation versus CIT reported in 130 ITR 18 (P& H) wherein it is held that an element of refund or repayment is a must in case of concept of borrowing and if there is no obligation to refund the capital provided, the interest on such capital is not deductible u/s 36(1)(iii) of the Act. Accordingly, the Ld. A.O. held that in case of perpetual bonds, where the lender does not have authority t…

State Bank of India (Successor to State Bank of Bikaner & Jaipur), Mumbai vs. ACIT -Circle 2(2)(1), Mumbai

In the result, the appeal of the Revenue is dismissed, whereas the appeal of the assessee is allowed partly for statistical purposes

Bench: Shri Om Prakash Kant (Account Member) & Ms. Kavitha Rajagopal () I.T.A. No. 3033/Mum/2019 (A.Y. 2015-16) I.T.A. No. 2873/Mum/2019 (A.Y. 2015-16) Dcit-2(2)(1), Vs. M/S State Bank Of India Mumbai (Successor To State Room No. 545, Bank Of Bikaner & 5Th Floor, Ayakar Jaipur) Bhavan Financial Reporting & Mumbai-400020 Taxation, 3Rd Floor, Corporate Centre, Madam Cama Road Nariman Point, Mumbai- 400021 (Appellant) (Respondent)

…petual nature, high loss absorption capacity and discretionary payout with existence of full coupon discretion. The Ld. A.O. relied on the decision of Hon’ble Punjab and Haryana High Court in the case of Pepsu Road transport Corporation versus CIT reported in 130 ITR 18 (P& H) wherein it is held that an element of refund or repayment is a must in case of concept of borrowing and if there is no obligation to refund the capital provided, the interest on such capital is not deductible u/s 36(1)(iii) of the Act. Accordingly, the Ld. A.O. held that in case of perpetual bonds, where the lender does not have authority t…

ACIT-2(3)(2), Mumbai vs. M/S Icici Bank Ltd., Mumbai

In the result, the appeal of the assessee is allowed while for the appeal of the revenue stand dismissed

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopalicici Bank Limited Vs. The Acit, Circle 2(3)(2) Icici Bank Towers Aayakar Bhavan, 5Th Bandra Kurla Complex Floor, Room No. 552/556 Bandra (East) Mumbai – 400 020 Mumbai – 400 051 स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No: Aaaci1195H Appellant .. Respondent The Acit, Circle 2(3)(2) Vs. Icici Bank Limited Aayakar Bhavan, 5Th Icici Bank Towers Floor, Room No. 552 Bandra Kurla Complex Mumbai – 400 020 Bandra (East) Mumbai – 400 051 स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No: Aaaci1195H Respondent .. Appellant

…0.2016 USD 34,00,00,000 1,16,68,81,013 2,47,65,45,011 It is further noticed that the assessee had demonstrated from the submission that these debt instruments were also redeemed. We also find that facts of the case of Pepsu Road Transport Corporation Vs. CIT 130 ITR 18 (P & H) relied upon by the ld. D.R. are distinguishable from the case of the assessee. In that case the capital was not borrowed but the same was provided by the Government as per the provisions of the Road Transport Corporation Act, 1950 whereas in the case of the assessee bank it had borrowed the money from the lenders. Similarly the fact of the…

Icici Bank Limited, Mumbai vs. The Asst. CIT Circle 2(3)(2), Mumbai

In the result, the appeal of the assessee is allowed while for the appeal of the revenue stand dismissed

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopalicici Bank Limited Vs. The Acit, Circle 2(3)(2) Icici Bank Towers Aayakar Bhavan, 5Th Bandra Kurla Complex Floor, Room No. 552/556 Bandra (East) Mumbai – 400 020 Mumbai – 400 051 स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No: Aaaci1195H Appellant .. Respondent The Acit, Circle 2(3)(2) Vs. Icici Bank Limited Aayakar Bhavan, 5Th Icici Bank Towers Floor, Room No. 552 Bandra Kurla Complex Mumbai – 400 020 Bandra (East) Mumbai – 400 051 स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No: Aaaci1195H Respondent .. Appellant

…0.2016 USD 34,00,00,000 1,16,68,81,013 2,47,65,45,011 It is further noticed that the assessee had demonstrated from the submission that these debt instruments were also redeemed. We also find that facts of the case of Pepsu Road Transport Corporation Vs. CIT 130 ITR 18 (P & H) relied upon by the ld. D.R. are distinguishable from the case of the assessee. In that case the capital was not borrowed but the same was provided by the Government as per the provisions of the Road Transport Corporation Act, 1950 whereas in the case of the assessee bank it had borrowed the money from the lenders. Similarly the fact of the…